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Category: Individual Income Tax

Tax Tips (22) – Dealing with International Tax Cooperation
A multilateral tax cooperation mechanism under the Belt and Road Initiative (BRI), the Belt and Road Initiative Tax Administration Mechanism (BRITACOM) which includes tax authorities from 34 countries and regions, was established on 18 April 2019. The reported aim of BRITACOM is to facilitate cross-border trade and investment along BRI routes by expanding tax dispute resolution activities, increasing transparency, streamlining compliance and digitizing filing. An office will be opened in Beijing to help facilitate these goals.

Since the BRI consists primarily of Chinese outbound investment in infrastructure projects in the participating countries, BRITACOM will likely function more in facilitating outbound Mainland Chinese entities’ local tax compliance and dispute resolution when engaged in such projects. BRITACOM will be different from the various anti-tax avoidance initiatives of the OECD and other international organisations.

International Effort in Anti-Tax Avoidance

The most well-known international effort against tax avoidance is the Base Erosion and Profit Shifting (BEPS) project. The 15 BEPS Actions issued in October 2015 challenge tax avoidance practices by large Multinational Enterprises (“L-MNEs”) by amending the global tax treaties, increasing disclosure and transparency, introducing new documentation in transfer pricing, countering harmful tax practices, lowering threshold of permanent establishment recognition, investigating into new form of taxation for digital services and toughening interest deduction rules. The primary aim of BEPS is to ensure that the international tax rules do not facilitate the shifting of corporate profits away from the real economic activity and value creation are taking place. Many of these Actions have been implemented already, the latest being the Economic Substance Law (with the BVI just issued the Draft Economic Substance Code).

In addition, the OECD has stepped up efforts in international cooperation on tax matters in recent years. Heads of tax administrations meet regularly at the Forum of Tax Administration (FTA). Cross-border tax avoidance intelligence is shared among tax offices under the Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC). The International Compliance Assurance Programme (ICAP) invites large MNEs to engage voluntarily with tax administrations from 17 jurisdictions (expanded from 8 when the pilot began in January 2018). Tax Inspectors Without Borders sends experience tax officials to train those in developing countries to perform tax audits on MNEs.

The United Nation, the World Bank, the International Monetary Fund, and the European Unions are also very active in introducing new initiatives in combating tax avoidance.

Large MNEs have Acted

Many L-MNEs have already started restructuring back in around 2013/14 in view of the disclosure requirements especially the Country-by-Country Reporting (CbCR). In the past, many L-MNEs housed the intellectual properties (“IP”) in tax haven jurisdictions earning untaxed royalties or have captive insurance companies there to provide insurance coverage to group companies in order to receive untaxed income while the group companies could take a tax deduction. Smart L-MNEs would have restructured early so that no tax office would have the opportunity to ask the sensitive questions. Their most immediate challenge to the L-MNEs would likely be dealing with the economic substance law in the tax haven countries, especially those that have been acting as funding vehicles.

Smaller MNEs – Act Now

L-MNEs have internal tax resources to help them manage tax risks in this rapidly changing tax environment. What about the Small and Medium Size MNEs (S-MNEs) that do not have in-house tax people? They obviously have to rely on external tax consultants. The key is to identify the right consultants to do the following two things:

1. Review the existing structure, operations and arrangements

The objective of such review is to identify tax risks and opportunities currently embedded in the group structure and operations. The author had seen a group missing out the 50/50 offshore claim in the Hong Kong profits tax filing on a contract manufacturing arrangement. In another case, a Hong Kong-based listed group devoted resources in Hong Kong to help the overseas affiliates in high tax countries to become highly profitable but they do not realise that they should recoup the costs incurred in Hong Kong via transfer pricing in order to align with the commercial reality and reduce the group’s effective tax rate. These can be dug out and properly addressed in order to create legitimate tax saving.

Some groups have not paid attention to documentation of decision making and thereby creating risks of being regarded as tax resident in jurisdictions unexpectedly. The old model of cost-plus remuneration of agents may now be exposed to permanent establishment risks. Some have ignored the documentation of substance. The impact of the Economic Substance Law introduced by the tax havens such as the British Virgin Islands (BVI) must be properly analysed with a set of action determined to address the issue.

To be a good manager, issues should be addressed and resolved upfront so that the expectation of shareholders and directors of the group/company is well-managed. The review should be conducted by professionals with solid technical and business experience. There are well-qualified tax advisors in the market to do the work at competitive rates and high efficiency to deliver substantial value to the groups.

Often the finance managers of the groups/companies prefer to stick their heads into the sand instead of dealing with the problems because they don’t want to take the blame for issues uncovered by the seasoned tax advisors. It is thus important for the directors or even the shareholders to realise what the current tax environment is like and take initiative in carrying out the review. At the end of the day, if the hidden tax exposures are not cleared before they crystalise, the group/company, the directors and shareholders would be badly hurt.

2. Seek on-going tax support especially on documentation

Having identified and dealt with past issues, it is important that no such issue will arise again in the future. This can be achieved by retaining the tax advisor to review transactions or documentation as and when required, just a family doctor caring for the health of the family. For example, sometimes the auditors, being unaware of the tax exposure created, may make disclosures in the audited financial statements that are unnecessary and sometimes even harmful to the tax arrangement of the company. For listed companies, they should be very careful in the disclosures in the annual reports.

Board papers are crucial. It is direct evidence of management and control which is one of the key factors in determining substance and tax residency. Tax advisors play an important role in advising who should be on the board of each company, location of board meetings and review the board papers.

Also, management should be made aware of tax law changes and new cases that affect their business. Questions they should ask, or proactively addressed by the tax advisor, include:
- What are the benefits of the new tax incentives introduced in Hong Kong such as the two-tier tax system to the group?
- Should something be done about intellectual property in view of the new Section 15F of the Inland Revenue Ordinance?
- What should the group do in view of the Beneficial Ownership rules in Mainland China to ensure that the benefits can be obtained?
- Is CbCR going to affect the group?
- The boss travels to Mainland China often, is he exposed to the Chinese Individual Income Tax on worldwide income?
- Is the loan financing of a foreign subsidiary compliant with transfer pricing or will it be challenged by the tax authorities?
- In view of the tax cases, can the Hong Kong company still lodge an offshore claim on its trading profits? How to ensure a successful claim?
- How to structure a new acquisition? Is the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (commonly referred to as the Multilateral Instrument) going to affect the group? Would all the new tax rules introduced bring higher tax exposures in a share deal and how to mitigate such risks?
The list of questions can be much longer.

Tax Tips

It is time for the smaller groups to gear up the tax risk monitoring and compliance, and ensure that structures are sustainable in the medium term. The BEPS Project is at the implementation stage and it will not be long before OECD reviews the achievement and point to the next target: the S-MNE groups. The time to act is NOW.

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Ref:

BRITACOM: http://www.chinatax.gov.cn/eng/n2367751/c4273658/content.html
May 7, 2019
Tax Tips (21) – No Tax Even If Stay in China for Over 183 Days?

The article “The Mysterious 183 Days” (10 September 2018 – Tax Tips 15) addressed the question “Is it true that there is no IIT liability if one stays in the Mainland for not more than 183 days?”. The Ministry of Finance and the State Taxation Administration of Mainland China issued two important notices on Individual Income Tax (“IIT”) on 14 March 2019, namely 《Determination of the Duration of Residence of Non-China-domiciled Individuals – Public Notice 2019 No.34》 (“PN34”) and the very complex 《Policies Regarding the Tax Treatment of Non-Residents and Non-China-domiciled Resident Individuals – Public Notice 2019 No.35》 (“PN35”), which set out a new way of calculating the days of residence in China and details of IIT computation for non-residents and non-domiciled resident individuals under different scenarios. Both Public Notices are effective on 1 January 2019. This article focuses on the implications of the new definition of days of presence in China.

The Relevant Articles on the Days of Residence

To help Readers’ better understanding of the issue, the Articles in the IIT Law and Detailed Implementation Rules relating to the days of residence are set out below.

Article 1 of the IIT Law

Individuals who are domiciled in China, or non-domiciled but resided in China for 183 days in aggregate in a tax year, are resident individuals. Resident individuals are subject to IIT on income from sources within and outside China.

Individuals who are neither domiciled nor resident in China, or who are not domiciled and reside in China for less than 183 days in aggregate in a tax year, are non-resident individuals. Non-resident individuals shall pay IIT in accordance with this Law on income derived from sources within China.

Article 4 of the Detailed Implementation Rules of the IIT Law (“DIR”)

Individuals who are not domiciled in China and resided in China for 183 days in a year for a consecutive period of not more than 6 years, upon completion of filing procedures with the in-charge tax office, the foreign sourced income that is paid by foreign entities or individuals is exempt from IIT; whenever a single trip of more than 30 days is made in the year that the days of residence reached 183 days in aggregate, the accumulation of consecutive years would start afresh.

Article 5 of the DIR

Individuals who are not domiciled in China and resided in China for not more than 90 days in aggregate in a tax year, China sourced income that is paid by the foreign employer and is not borne by a place or establishment of the foreign employer located in China would be exempt from IIT.

PN34 – Days of Residence

Article 1 of PN34 clarifies what is meant by “resided in China for 183 days in a year for a consecutive period of not more than 6 years” as per Article 4 of the DIR of the IIT Law. The provisions are in line with the general expectation.

Article 2 is more impactful. The article states that: “the length of residence of a non-domiciled individual in China in a tax year shall be calculated based on the days of presence in China. A full 24 hours-day of presence would be counted as one day of residence. Where the presence is less than 24 hours in a day, that day is not counted as a day of presence”.

Based on PN34, only a full 24-hours day of presence would be counted as a day of residence in China. This day of residence is relevant to the determination of “resided in China for 183 days” or “more than/not more than 90 days” under Article 1 of the IIT Law and Articles 4 and 5 of the DIR. The implication of this change is that it will be harder for individuals to be subject to IIT or become a Chinese tax resident, and easier to meet the conditions set forth in Article 4 of the DIR such that IIT liabilities would be reduced or even totally exempted. This is good news to non-China-domiciled Hong Kong individuals.

PN35 – Days of Work

Article 1 Para 1 of PN35 is about the determination of the source of wages and salaries. Para 1 stated that “The wages and salaries earned by an individual attributable to the working period in China are regarded as China-sourced wages and salaries. The working period in China shall be calculated according to days worked by the individual in China, which includes the actual working days in China and days spent inside or outside China for public holidays, personal vacations and training.

If the individual holds employment positions in both foreign and Chinese entities or is solely working for foreign entities, time spent in China that is less than 24 hours in a day would be counted as 0.5 days for the purposes of determining the number of days worked in China.

Why is this method of counting so different from that prescribed in PN34? Since non-China sourced income that is paid by foreign entities or individuals outside of China would be exempt from IIT, the determination of China and foreign sourced income is very important.

If a Hong Kong individual is only working for an entity in China, the days that are spent outside of China for vacation or training are all related to China employment and it is reasonable to include days spent outside of China as a working period in China, such that no days would be deducted from his China working period. On the other hand, if an individual is working for both China and foreign entities, it is reasonable that part of a day spent in China is counted for only 0.5 days as China working period.

The foreign working period is determined by deducting China working period from the calendar days of the month. The number of days worked in China and outside China would be inserted into the formulae prescribed in PN35 in determining the wages and salaries from sources in and outside China.

Double Tax Arrangement – Days of Presence

“The Mysterious 183 Days” mentioned that the exemption from IIT for individuals who visit China for not more than 183 days is an effective extension of Article 7 of the old Detailed Implementation Rules of the IIT Law. Article 5 of the new DIR has basically retained the same provision. Under Article 14 <Income from Employment> of the Mainland-Hong Kong Double Taxation Arrangement (“CN-HK DTA”), the period of stay is “extended” from 90 days to 183 days. A Hong Kong resident would be exempt from IIT if the three conditions in Para 2 of Article 14 are all satisfied. The three conditions are:

1. the recipient is present in the Other Side for a period or periods not exceeding in the aggregate 183 days in any 12-month period commencing or ending in the taxable period concerned;
2. the remuneration is paid by, or on behalf of, an employer who is not a resident of the Other Side;
3. the remuneration is not borne by a permanent establishment which the employer has in the Other Side.

“The Mysterious 183 Days” also mentioned that in counting the actual number of days for condition 1, one should include all days spent in China, including days that are not the full day such as the day of arrival and day of departure, as well as weekends, holidays, and vacation etc spent in China before, during and after the employment. Does the relaxation of counting the days under PN34 cover the 183 days in the DTA?

Unfortunately, there is no relaxation for the purposes of the DTA (notwithstanding, relaxation can be attained under Article 5 of the DIR, as to be explained further below). The days referred to by PN34 is the “days of residence”, the days referred to in the DTA is the “days of presence”. The new definition applies to “days of residence” only. Thus the counting of 183 days under the DTA has not changed.

According to the OECD Model Tax Convention on Income and on Capital: Condensed Version 2017, there is only one method of counting 183 days: the “days of physical presence” method, which aligns with what was mentioned in “The Mysterious 183 Days”.

PN35 listed out a number of old IIT circulars that are abolished with effect from 1 January 2019, which included the “State Taxation Administration Notice on Certain Issues in Relation to the Implementation of DTA and IIT Law for Non-China-Domiciled Individuals – GuoShuiFa (2004) No.97”. Article 1 of the circular stated that “for individuals who do not have a domicile in China, for the purposes of calculating the days of residence in China for the determination of IIT liabilities under the law or DTA, the actual physical presence days would be counted. The day of arrival, the day of departure, round-trip and multiple round-trips to and from China would each be counted as one day of presence”. The new definition of days under PN34 and the abolition of GuoShuiFa (2004) No.97 could lead some people to wonder if the method of calculating the days of presence under the DTA has also been amended.

Readers should also pay attention to the fact that Article 15 Para 2(1) of the circular “Interpretation of the DTA between China and Singapore and the Protocols – GuoShuiFa (2010) No.75” applies the same OECD method in computing the days of presence, and the article in this circular has not been abolished by PN35.

The IIT Law is More Favorable than Tax Treaty Provisions?

Assuming a Hong Kong resident who is not domiciled in China and only has employment in Hong Kong. His salary is paid by the Hong Kong employer in Hong Kong and is not borne a place or establishment of the employer in China (fulfilled the 3 conditions set forth in Article 14 Para 2 of the CN-HK DTA and Article 5 of the DIR). Starting in 2019, the individual visits China every week, Monday to Friday, and his weekly travel pattern is as follows:

Monday Hong Kong to Guangzhou
Tuesday Guangzhou to Hong Kong
Wednesday Day trip to Shenzhen
Thursday Hong Kong to Zhuhai
Friday Zhuhai to Hong Kong
Saturday Hong Kong
Sunday Hong Kong

According to CN-HK DTA, the individual stayed 5 days in a week in China, and he will reach 183 days in week 37 such that he will have to report and pay IIT for his China-sourced income for the past 37 weeks. However, the individual’s day of residence in China is zero. Is he subject to IIT?

The point to note here is that zero-day of residence does not mean zero-workday in China. Therefore, the individual is still required to apply the formulae in PN35 to determine the IIT calculation in this case.

Tax Tips

Whenever an employee is seconded to work in China or an individual chooses to be employed by a Mainland Chinese enterprise or even taking up positions inside and outside China, the IIT implications should be carefully assessed. The individual’s domicile, residency, employment inside or outside of China, the bearer of wages and salaries, the days of residence, work and presence would all affect the reporting and calculation of IIT.

Although under the new IIT law the tax rates have been reduced, more deductions are allowed and the grace period of avoiding taxation on global income has been extended, the complexity of the new IIT law has made it more difficult to comply, easier to make filing mistakes and result in increased tax risk.

On the other hand, the more relaxed days of residence calculation would encourage more people to stay in China for a longer period of time, which would make it easier for foreign enterprises to create a Permanent Establishment in China (discussed in details in “The Mysterious 183 Days”). The matter has to be handled carefully by both employers and individuals.

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(This is an English translation of the Chinese article published in the Hong Kong Economic Journal Forum on 29 March 2019: https://manageyourtax.com/HKEJ Forum 21 )

Ref:

Public Notice 2019 No.34
http://www.chinatax.gov.cn/n810219/n810744/n3752930/n3752974/c4151944/content.html

Public Notice 2019 No.35
http://www.chinatax.gov.cn/n810219/n810744/n3752930/n3752974/c4151934/content.html

IIT Law
http://www.chinatax.gov.cn/n810219/n810744/n3752930/n3752974/c3970366/content.html

IIT Law Implementation Rules
http://www.chinatax.gov.cn/n810219/n810744/n3752930/n3752974/c3963364/content.html

CN-HK DTA
https://www.elegislation.gov.hk/hk/cap112AY!en-zh-Hant-HK?INDEX_CS=N&xpid=ID_1438402590626_001

Model Tax Convention on Income and on Capital: Condensed Version 2017
https://read.oecd-ilibrary.org/taxation/model-tax-convention-on-income-and-on-capital-condensed-version-2017_mtc_cond-2017-en#page307

GuoShuiFa (2004) 97
http://www.chinatax.gov.cn/n810341/n810765/n812193/n812988/c1202708/content.html

China-Singapore DTA Implementation Notes
http://www.chinatax.gov.cn/n810341/n810765/n812161/n812547/c1085021/content.html

March 29, 2019
Tax Tips (17) – Chinese Individual Tax Reform – The Dual-Residency Issue

With the extensive media coverage in Hong Kong and elsewhere, Readers should already be well aware that the revised draft Detailed Implementation Rules of the Individual Income Tax (“IIT”) Law of China (“Draft DIR”) released by the Chinese Ministry of Finance and the State Administration of Taxation on 20 October 2018 for public consultation has provided a generous relaxation on the IIT for non-domicile tax resident (please refer our Tax Tips (14) for background).

According to Article 4 of the Draft DIR, IIT would be imposed on China-sourced income only, provided that the non-domicile resident individual does not stay in China for 183 Days for 5 consecutive years, or, in case the individual has spent 5 consecutive years, he has made a single trip outside of China for more than 30 days during the said 5 years. In other words, the “5 Year Rule” of the existing DIR has been retained with a large degree of relaxation in the Draft DIR, such that the fear that foreign individuals (including Hong Kong individuals) would be subject to IIT on worldwide income for spending 183 days in China has been swept away.

However, when one looks closer at the provisions, there is an important issue that foreign individuals should pay serious attention to.

You Become A Chinese Tax Resident by Spending 183 Days in China!

Under Article 1 of the new IIT Law effective 1 January 2019, a tax resident is defined to include a non-domiciled individual who resides in China for 183 days in a fiscal year (there is no tax resident concept in the existing IIT Law). Article 4 of the Draft DIR mentioned above applies to such an individual. Therefore, a foreign individual who does not have a domicile in China but resides in China for 183 days would still be regarded as a Chinese tax resident under the IIT Law, and, upon meeting the requirements under Article 4 of the Draft DIR, he can be exempt from IIT on foreign-sourced income. [Update] The Public Notice 2019 No.34 issued on 14 March 2019 has an impact here. Please refer to Tax Tips (21) – No Tax Even if Stay in China for Over 183 Days? for details.

Accordingly, while the concern of IIT on worldwide income for foreign individuals has been eliminated, as they are regarded as Chinese tax residents, they will likely be considered tax resident of both their home jurisdiction and China. This dual-residency status creates two important issues:

1. Foreign Tax Credit Claim

The foreigner, as tax resident at his home jurisdiction, may be subject to home tax on the China-sourced income. In order to eliminate double taxation, the foreigner has to lodge a tax credit claim. However, unless domestic rules allow for other tax credit claim mechanisms, the tax credit shall be claimed on the basis of the relevant Double Tax Arrangement (“DTA”) signed with the Other Side for which the tax is suffered, which in this case is China.

For Hong Kong individuals, in the past, most would rely on the salaries tax income exclusion claim under Section 8(1A)(c) of the Hong Kong Inland Revenue Ordinance (“IRO”) to eliminate double taxation, instead of filing a tax credit claim. Unfortunately, the rule has just been changed. Claims under Section 8(1A)(c) of the IRO would no longer be accepted from 1 April 2018 (Year of Assessment 2018/19) onwards for Hong Kong taxpayers who have paid foreign tax of similar nature in other jurisdictions that have signed DTA with HK, which includes Mainland China. Instead, they have to claim relief of double taxation by tax credit under Section 50 of the IRO. Please note that Section 8(1A)(c) is still available in respect of tax suffered in jurisdictions that have not signed DTA with Hong Kong.

Technically, to claim a foreign tax credit under a DTA the individual shall be a tax resident of Hong Kong. If the individual is also a tax resident of Mainland China, the place of tax residency should first be established before a tax credit claim can be lodged in Hong Kong. How to determine the place of tax residency? According to Article 4(2) of the DTA between Hong Kong and Mainland China, when an individual is a resident of both Sides, his status shall be determined by the tie-breaker rules with reference to his “Permanent Home”, “Centre of Vital Interests” and “Habitual Abode”.

Details of the above tie-breaker rules have been discussed extensively in Tax Tips (14) so they will not be repeated here.

On the other hand, if a US tax resident is sent by his US employer to work in China for a period of time which exceeded 183 days in a year so that he has become a dual-resident for both the US and China, regardless of the dual-residency status, he would still be able to claim the foreign tax credit under the US domestic rules. The impact of dual-residency on double taxation for individuals from different home jurisdictions would therefore have to be determined on a case-by-case basis.

2. CRS Automatic Exchange of Information

If a foreign individual becomes a Chinese tax resident, he needs to be very careful in declaring his tax residency for anything related to the Common Reporting Standard (“CRS”). Under CRS, financial information of individuals will be automatically exchanged to the jurisdiction of the individual’s tax residency. As it may take time to confirm oneself as non-resident of China under the tie-breaker rules in the relevant DTA, individuals who do not want their information to be made available to Chinese tax authorities may want to avoid becoming Chinese tax residents, which could happen on 2 July 2019 the earliest, by leaving China, thereby potentially creating a talent drain.

What Can You Do?

Make your voice heard

Ideally, the Draft DIR should be amended such that individuals meeting the conditions under Article 4 of the Draft DIR would not be regarded as Chinese tax residents. They should file IIT as non-residents under Article 6(2) of the new IIT Law without the various new deductions available to resident individuals and at the same time, be entitled to the various IIT exemption on allowances currently available to foreigners for child education, language training, housing, meals, laundry, home visits, removal and deduction on Mainland social security contributions. This way, the transition to the new IIT Law would be stable and the stated policy objective of attracting foreign talents would be achieved.

If Article 4 of Draft DIR remains unchanged in the final version, in order to avoid the foreign tax credit and CRS issues mentioned above, many foreign individuals working in China will need to prepare for the determination of tax resident status as soon as reaching 183 days of stay. As mentioned in Tax Tips (14), it is likely that the Chinese tax offices have handled very few cases of resident determination in the past and when such cases begin to surface next year, the volume and technicality of the cases could be very challenging for the Chinese tax officers. The competent authorities may need to be involved too. One possible way of reducing the magnitude of the problem is to amend the DTA between Hong Kong and China to make it easier for Hong Kong individuals to be recognised as Hong Kong tax residents.

The other option is, of course, avoid residing in China for 183 days each year.

[Update on 23 Dec 2018] The new IIT DIR has been released. There is no change to the rules regarding tax residency so the concerns expressed above have, unfortunately, become real.

Tax Tips

Companies and individuals are recommended to closely follow the development of the Draft DIR in order to ensure that human resources issues are managed well and the employees’ concerns are addressed. For Hong Kong individuals who ordinarily reside in Hong Kong, they should consider applying for the Certificate of Resident Status with the Hong Kong Inland Revenue Department as supporting of tax resident status. Affected individual and companies should talk to knowledgeable tax consultants as soon as possible for advice on managing tax exposure.

The Author would like to thank US Individual Tax expert Ms. Virginia La Torre Jeker J.D. for her comments on the US tax implications in the example mentioned in this article. Please visit https://us-tax.org/ for more information about Virginia.

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(This is an English translation of the Chinese article published in the Hong Kong Economic Journal Forum on 5 November 2018: https://manageyourtax.com/HKEJ Forum 17)

Ref:

New IIT Law: https://baike.baidu.com/item/%E4%B8%AD%E5%8D%8E%E4%BA%BA%E6%B0%91%E5%85%B1%E5%92%8C%E5%9B%BD%E4%B8%AA%E4%BA%BA%E6%89%80%E5%BE%97%E7%A8%8E%E6%B3%95/1289974?fromtitle=%E4%B8%AA%E4%BA%BA%E6%89%80%E5%BE%97%E7%A8%8E%E6%B3%95&fromid=4307817

Public consultation: http://yjzj.chinatax.gov.cn/hudong/noticedetail.do?noticeid=1701567 (this link may not work after 4 November 2018)

November 5, 2018
Tax Tips (15) – The Mysterious 183 Days

The Amendments to the Individual Income Tax Law of the People’s Republic of China (“the Amendments”) discussed in the last issue of Tax Tips was promulgated by the National People’s Congress on 31 August. Included in the Amendment, as expected, is the adaptation of the tax resident person concept into Article 1 of the law.

Around one week before the Amendments were passed, the topic of Hong Kong people who enters the Mainland for more than 183 days will be subject to Individual Income Tax (“IIT”) liabilities of up to 45% on income earned outside of the Mainland started to heat up in the Hong Kong media.

On 31 August, according to Hong Kong media reports, Mr. Tam Yiu-Chung, member of the Standing Committee of the National People’s Congress, claimed that Hong Kong and Macau residents would have a five-year grace period, such that they would only need to pay IIT on income earned outside of the Mainland after the year 2024.

The introduction of tax residency concept would indeed have a huge impact on Hong Kong and Macau residents due to their close ties with Mainland China. It can be imagined that for residents from countries such as Japan, the United Kingdom and the United States who visit China for 183 days or more, as they would unlikely buy properties in China, they would likely maintain their home and economic ties in their home countries, and their home tax authorities would have much experience in tax residency determination, their tax residency status should be relatively clear-cut. If what Mr. Tam said is implemented, Hong Kong people can put the issue aside for the next five years.

A potential big loser to the Amendments is Taiwanese individuals. The Mainland and Taiwan signed the Cross-Strait Agreement for the Avoidance of Double Taxation and Strengthening of Tax Cooperation in 2015 (contents are similar to a standard double taxation agreement) but the Agreement is not yet in effect. In 2019 when Taiwan individuals become Mainland tax residents by staying in the Mainland for 183 days, they may need to pay IIT on income derived from inside and outside of the Mainland. If the individuals are also subject to Taiwan income tax on the same income, a double taxation situation will arise which cannot be resolved through a double taxation agreement (the tie-breaker discussed in the last Tax Tips). Nevertheless, as tax policies are designed to serve the economic and political needs, it is possible that the five-year grace period may include Taiwan individuals. At this moment, the only thing that can be done is wait-and-see.

Originally, this issue of Tax Tips would discuss how should Hong Kong companies manage the upcoming challenge in IIT. However, as the issue may be put to bed for 5 years, Hong Kong companies may not be interested in it anymore. Readers should watch the development closely in the coming months. This issue would instead discuss the so-called “183 Days Rule”, which has been given a new meaning by the Amendments: Is it true that there is no IIT liability if one stays in the Mainland for not more than 183 days?

The 183 Days Rule

Many Hong Kong people who frequently travel to the Mainland would have heard that IIT would be imposed if one stays in the Mainland for more than 183 days. Is it true? When one reads Article 1 of the IIT Law, whether the existing one or the amended version, it is clear that a non-domicile person who resides in China for less than 183 days are required to pay IIT on income derived from sources within China:

Current version: “Individuals who are neither domiciled nor resident in China, or who are not domiciled and reside for less than one year in China, shall pay individual income tax in accordance with this Law on income derived from sources within China.”

Amended version: “Individuals who are neither domiciled nor resident in China, or who are not domiciled and reside in China for less than 183 days in a tax year, are non-resident individuals. Non-resident individuals shall pay individual income tax in accordance with this Law on income derived from sources within China”.

So, is one liable to IIT if one stays in China for not more than 183 days?

The exemption from IIT for individuals who visit China for not more than 183 days is an effective extension of Article 7 of the Detailed Implementation Rules of the IIT Law (“DIR”, which is also subject to corresponding amendments to be announced). Under Article 7 of the DIR, “Individuals who are not domiciled in China, but stay in China continuously or in aggregate for not more than 90 days in a tax year, would be exemption from IIT on income derived from sources within China that is paid by the foreign employer and is not borne by a place or establishment of the foreign employer located in China”. In principle, when an employee enters China and performs services, the income would be regarded as derived from sources within China. Provided that the employee does not stay in China for more than 90 days in a tax year (continuously or in aggregate), and the income is paid by the foreign employer which is not borne by any place or establishment of the foreign employer, no IIT would be imposed. Under Article 14 <Income from Employment> of the Mainland-Hong Kong Double Taxation Arrangement (“CN-HK DTA”), the period of stay is extended from 90 days to 183 days; the relevant provisions in Para 1 and 2 are as follows:

“1. Subject to the provisions of Articles 15 [Director’s Fees], 17 [Pensions], 18 [Government Service], 19 [Students] and 20 [Other Income], salaries, wages and other similar remuneration derived by a resident of One Side in respect of an employment shall be taxable only in that Side unless the employment is exercised in the Other Side. If the employment is exercised in the Other Side, such remuneration as is derived therefrom may be taxed in that Other Side.

2. Notwithstanding the provisions of paragraph 1 of this Article, remuneration derived by a resident of One Side in respect of an employment exercised in the Other Side shall be taxable only in that One Side if all the following 3 conditions are satisfied:
(1) the recipient is present in the Other Side for a period or periods not exceeding in the aggregate 183 days in any 12-month period commencing or ending in the taxable period concerned;
(2) the remuneration is paid by, or on behalf of, an employer who is not a resident of the Other Side;
(3) the remuneration is not borne by a permanent establishment which the employer has in the Other Side.”

The most important point is that all 3 conditions in Para 2 shall be satisfied in order to enjoy the 183 days exemption, otherwise the individual may fall into Article 1 of the IIT Law and liable to IIT on income derived from sources in China. Although the rules have been in existence for a long time, many people are still unaware of Condition 2 and 3, and they believe that simply avoid staying in China for over 183 days would be good enough to get away from IIT (and they may not even know how the days are counted).

How to Count 183 Days

The first important point is how to calculate 183 days. “Any 12-month period commencing or ending in the taxable period concerned” denotes two concepts, namely, that the number of days of presence may straddle over 2 years, i.e. the days of presence can be calculated continuously or in the aggregate irrespective of the year; and that a floating calculation method may be adopted. The 12-month period can commence or end at any day within the taxable period concerned. In counting the actual number of days, one should include all days spent in the Mainland, including days that are not the full day such as the day of arrival and day of departure, as well as weekends, holidays, and vacation etc spent in the Mainland before, during and after the employment.

[Update] The Public Notice 2019 No.34 issued on 14 March 2019 has an impact here. Please refer to Tax Tips (21) – No Tax Even if Stay in China for Over 183 Days? for details.

Who is the Employer

Some may think that Condition 2 “the remuneration is paid by, or on behalf of, an employer who is not a resident of the Other Side” is easy to satisfy, by simply having the Hong Kong employer bears all the employment costs without charge-back to the Mainland entity that the employee works in. It is not that simple. The “employer” is the party who owns the work product of, is responsible for, bears the risk of, and assess the performance of the individual. If the Mainland entity owns the work product of the individual, is responsible for his well-being, bears the risk of his acts, and assess his performance, the tax authority would regard the Mainland entity to be the real employer, and the income of the individual would be subject to IIT on the part performed in the Mainland.

The tax authority would consider the following factors in assessing the employer-in-substance:

(1) Does the Mainland entity direct the work of the individual;
(2) Does the Mainland entity determine and is it responsible for the working location of the individual;
(3) Does the Mainland entity provide the tools and materials to the individual in performing his duties;
(4) Does the Mainland entity determine the quantity and requirement of the position?

The above are common factors considered in determining if the master-servant relationship exists. Hong Kong entities sending employees to the Mainland should pay attention to such details and ensure there is documentary evidence to support the master-servant relationship. Mainland tax authorities will take the substance-over-form approach in assessing the identity of the real employer.

Permanent Establishment

Condition 3 is related to Permanent Establishment (“PE”) which is a relatively complex area. Some basic understanding of what constitutes a PE is required.

When an employee is sent to work in China at a place or establishment that is relatively fixed and lasting, that place or establishment could be regarded as a PE. Conceptually it is like an unregistered branch of a foreign entity. If the employer is a Hong Kong entity, the CN-HK DTA shall be referred to in determining whether a PE exists.

According to Article 5 of the CN-HK DTA, the term “PE” means a fixed place of business through which the business of an enterprise is wholly or partly carried on, including a place of management, a branch, an office, a factory, a workshop, a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, as well as:

(1) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only if such site, project or activities last more than 6 months;

(2) the furnishing of services, including consultancy services, by an enterprise of One Side in the Other Side, directly or through employees or other personnel engaged by the enterprise, but only if such activities continue (for the same or a connected project) for a period or periods aggregating more than 183 days [NB] within any 12-month period.

Many people can understand sub-paragraph (1) above but not sub-paragraph (2).

When a Hong Kong entity sends employees to a fixed location in the Mainland to work in a project or connected project within any 12-month period, and from the first day of arrival to the project completion day the period of stay (continuously or in aggregate) exceeds 183 days, the fixed location is a PE of the Hong Kong entity unless exemption under CN-HK DTA applies. The number of days is counted based on all employees of the entity who work in the Mainland at different times for the same project, and each day is only counted once when more than one employee is present at the same time. For example, if a Hong Kong entity (Company A) sends 10 employees to work for the same project at the same time for 3 days, the aggregate days in China is 3 days and not 30 days. However, if another Hong Kong entity (Company B) sends 1 employee to work for a project in the Mainland for 100 consecutive days, and then sends another employee to the Mainland for the same project soon afterwards, PE would be created when the second employee stays more than 83 days, creating Corporate Income Tax liability for Company B.

Condition 3 of Article 14 Para 2 requires that the employee remuneration is not borne by a PE or fixed place of the employer located in the Mainland. If a Hong Kong individual is sent to perform services at a PE of the employer in the Mainland, or the employees themselves have created a PE of the employer through the carrying out of a project or contracted work, their remuneration is deemed to be borne by the PE no matter the length of time of their services and where the remuneration is actually paid. This rule, however, does not apply to individuals who visit the PE for inspection, review or provide temporary assistance for the head office.

In the above example, the two employees of Company B are both liable to IIT even though each of them stays in the Mainland for not more than 183 days.

Lastly, if one of the employees of Company B stayed in the Mainland for more than 183 days, would he be considered a Mainland tax resident and subject to IIT on his worldwide income (assuming that there is no five-year grace period)? What information is needed to make the determination? The answer is for the Readers to work out.

Tax Tips

183 days can be the difference between paying or not paying IIT, or the triggering point from paying IIT on China sourced income to worldwide income, and each situation has to be studied on a case-by-case basis to determine how should the rules be applied. The different ways of counting 183 days (less than or not more than 183 days, and over which period) for different purposes can often create confusion. From experience, many Hong Kong enterprises are not aware of the issue, and some of them even print the Mainland address on the name cards of the Hong Kong employees, which becomes a useful clue to the tax authority and create tax risks. Enterprises facing such issues should review the operating structure and staff secondment arrangement to manage their tax exposure.

NB: CN-HK DTA Second Protocol Article 3

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(This is an English translation of the Chinese article published in the Hong Kong Economic Journal Forum on 10 September 2018: https://manageyourtax.com/HKEJ Forum 15)

Ref:
Final version of IIT Law amendments:
http://www.npc.gov.cn/npc/xinwen/2018-08/31/content_2060151.htm

HK news report on 5 year grace period:
https://www.881903.com/Page/ZH-TW/newsdetail.aspx?ItemId=1027694&csid=261_341

CN-TW DTA:
http://www.chinatax.gov.cn/n810341/n810770/c1794734/part/3360344.pdf

Current IIT Law Implementation Rules:
http://www.chinatax.gov.cn/n810341/n810765/n812156/n812479/c1186518/content.html

September 10, 2018
Tax Tips (14) – My Worldwide Income will be subject to IIT if I stay in China for 183 days?
The month-long public consultation of the Draft Amendments to the Individual Income Tax Law of the People’s Republic of China ended on 28 July 2018. According to the website of the National People’s Congress (“NPC”, www.npc.gov.cn), more than 67,000 people have submitted over 130,000 comments on the Draft Amendments. Through the increase of standard deduction, widening the lower tax bands and introducing specific deductible items, the Individual Income Tax (“IIT”) burden on individuals is expected to reduce. The NPC website reported that the IIT payable by an individual making RMB10,000 a month drop by 74%.

However, if the Draft Amendments are passed as they are, starting next year, when a foreign individual resides in China for 183 days or more in a year, his foreign earnings may be subject to IIT. This is particularly worrying for Hong Kong individuals, many of them work for Multinational Enterprises based in Hong Kong, who travel to the Mainland frequently to carry out their employment duties.

The last issue of Tax Tips was about tax residency of companies. Thanks to the timely introduction of tax residency into the IIT Law, this issue of Tax Tips discusses tax residency of individuals, which will have a profound impact on Hong Kong businesses and individuals.

The Current Rules

Article 1 of the current IIT Law reads as follows:

“Individual income tax shall be levied in accordance with the provisions of this Law by individuals who have a domicile in China, or though without domicile but have resided for one year in China on their income derived from sources within and outside China.

Individuals who are neither domiciled nor resident in China, or who are not domiciled and reside for less than one year in China, shall pay individual income tax in accordance with this Law on income derived from sources within China.”

What is domicile, not domicile, reside for one year or less than one year? According to the Detailed Implementation Rules of the IIT Law (“DIR”, which is also subject to corresponding amendments to be announced), the term “individuals who have domicile in China” means individuals who by reason of their permanent registered address (HuJi), family or economic interests, habitually reside in China. The DIR did not define what is “not domiciled in China” but generally it refers to individuals who do not fall into the definition of domicile in China. In practice, as long as the individual does not possess HuJi in China, that person would be a Foreigner and regarded as not domiciled in China.

The term “resided for one year in China” means to have resided within China for 365 days in a tax year. That does not mean that only those who live in China every day in a tax year would become what is commonly referred to as “One Year Taxpayer”. According to the DIR, no deduction of days would be considered for “temporary departure”, which is defined as absence from China for not more than 30 days in a single trip, or not more than a cumulative total of 90 days over a number of trips, within the same tax year. In other words, in order to avoid being considered a One Year Taxpayer and pay IIT on income sourced in and outside China (i.e. worldwide income), the individual shall either travel outside of China for more than 30 days in a single trip, or more than 90 days cumulatively, in a tax year. As long as the individual is not domiciled in China and is not a One Year Taxpayer, only income sourced in China is subject to IIT.

Having said the above, many Foreigners who station in China with temporary departures are not paying IIT on their worldwide income. This is because Article 6 of the DIR provides that: for individual not domiciled in China and resides in China for more than one year and less than five years, subject to the approval of the tax authorities-in-charge, IIT may be paid on only that part of income which was paid by companies, enterprises or other economic organisations or individuals in China. Individuals who reside for more than five years shall, commencing from the sixth year, pay IIT on the whole amount of income derived from sources outside China.

The effect of this Article is that Foreigners would only be subject to IIT on worldwide income on the sixth year if they become One Year Taxpayer for five consecutive years. Therefore, many Foreigners who have stationed in China for four years would, on the fifth year, make a single trip out of China for more than 30 days, or spend more than 90 days cumulatively outside of China, in order to restart the five-year-count. As such, it should be very rare that any Foreigners would be paying IIT on their worldwide income.

The Draft Amendments

The concept of tax resident has been introduced by the Draft Amendments to replace One Year Taxpayer. Article 1 of the IIT Law will be replaced by:

“Individuals who have a domicile in China, or though without domicile but have resided in China for 183 days or more in a tax year, shall be a resident individual and subject to individual income tax in accordance with the provisions of this Law on their income derived from sources within and outside China.

Individuals who are neither domiciled nor resident in China, or who are not domiciled and reside in China for less than 183 days in a tax year, shall be regarded as a non-resident person, and pay individual income tax in accordance with this Law on income derived from sources within China.”

If the above is passed into law, assuming that the definition of “domicile in China” is unchanged, Foreigners (including Hong Kong individuals) would be regarded as Chinese tax residents by residing in China for 183 days in a tax year, and their worldwide income would be subject to IIT. As a result, Foreigners may easily become dual-residents – resident of both their home jurisdiction and China. Unless the to-be-amended DIR contains provisions relaxing the requirements (similar to the provision in Article 6 discussed above), the period of stay required for IIT to be imposed on worldwide income shall be reduced from five years to 183 days!

It is understood that the Draft Amendments will be passed in August this year, and the revised IIT Law will be effective 1 January 2019. From 1 October 2018 to 31 December 2018, IIT on salaries and wages may be calculated by applying the new monthly standard deduction of RMB5,000 and the new tax rates (for consolidated income), without deducting the additional deduction (previously available to Foreigners).

What kind of Foreign Income is subject to IIT?

All income items covered under the IIT Law shall be subject to IIT at the applicable new rates, as follow:
1. Consolidated income (salaries and wages, labour services, author’s remuneration, royalties) at progressive rates from 3% to 45%;
2. Business income at progressive rates from 5% to 35%;
3. Interest, dividend, gains, property leasing income, property transfer income, occasional income and other income at a rate of 20%.
That is to say, if a Hong Kong individual becomes a Mainland tax resident, the above kinds of income earned in Hong Kong, including the potentially substantial amount of income from property transfer, could be subject to IIT. The Mainland tax authorities would have the taxing right even on income that is subject to Hong Kong tax, such as property rental income.

OMG, what should I do?

Before knowing how the DIR is to be amended, taking action now would seem immature. Notwithstanding, there is no harm in thinking possible solutions.

The simplest solution is to avoid staying in China for 183 days or more. That would not be easy for Hong Kong people who need to daily commute to nearby Chinese cities, and it may be harder in the future under the Greater Bay Area Initiative being promoted by the Hong Kong and Mainland governments.

A more complex and troublesome way is to re-allocate foreign assets and earnings so that the income generated would not be considered the income of the Foreigner. This is a somewhat palliative measure that should be considered only as the last resort.

A better solution is to dig deeper into the tax rules to find the way out.

Definition of “Resident” in Double Tax Agreement

Whenever tax issues between two tax jurisdictions arise, the Double Tax Agreement/Arrangement (“DTA”), if available, should be consulted. For Hong Kong individuals, the DTA between Hong Kong and the Mainland (“HK-CN DTA”) would be relevant. According to Article 4 – Resident of the HK-CN DTA, the term “resident of One Side” (for the part relating to individuals) means:

“(1) in the case of the Mainland of China, any person who, under the laws of the Mainland of China, is liable to tax therein by reason of his domicile, residence … or any other criterion of a similar nature. This term, however, does not include any person who is liable to tax in the Mainland of China in respect only of income from sources in the Mainland of China;

(2) in the case of the Hong Kong Special Administrative Region:

(i)an individual who ordinarily resides in the Hong Kong Special Administrative Region;
(ii)an individual who stays in the Hong Kong Special Administrative Region for more than 180 days during a year of assessment or for more than 300 days in 2 consecutive years of assessment one of which is the relevant year of assessment…”

In case an individual who ordinarily resides in Hong Kong becomes a Mainland tax resident under the new IIT Law, he would be regarded as a resident by both Sides. Not a situation that anyone would like to be in.

How to Decide Which Side the Individual a Resident of

It is not uncommon for a tax jurisdiction to treat a Foreigner a tax resident if he resides 183 days or more in that jurisdiction. The proposed amendment to Article 1 of the IIT Law is an alignment with the international norm. From the perspective of China, such an amendment is reasonable and perhaps long overdue. Since such a change practically has no impact to local Chinese nationals, it is likely that very few of the 130,000+ comments on the Draft Amendments would argue against the change. Therefore, it is expected that Article 1 will be amended as proposed.

As it is the international norm, it should be common for two Sides to dispute on the tax residency of an individual from one Side residing in the other Side. One of the main purposes of the DTA is to prevent double taxation and thus such disputes can be resolved by the DTA. Most, if not all, of the DTAs would contain rules to settle residency issue, which can be a direct negotiation between the competent authorities of the two Sides, or they go through the tie-breaker rules contained in the DTA first and only resolve by mutual agreement when the case goes into a deadlock. According to Article 4(2) of the HK-CN DTA, when an individual is a resident of both Sides, his status shall be determined by these tie-breaker rules:

(1) he shall be deemed to be a resident only of the Side in which he has a permanent home available to him; if he has a permanent home available to him in both Sides, he shall be deemed to be a resident only of the Side with which his personal and economic relations are closer (“centre of vital interests”);
(2) if the Side in which he has his centre of vital interests cannot be determined, or if he does not have a permanent home available to him in either Side, he shall be deemed to be a resident only of the Side in which he has an habitual abode;
(3) if he has an habitual abode in both Sides or in neither of them, the competent authorities of both Sides shall resolve by mutual agreement.

There are three technical terms here: “Permanent Home”, “Centre of Vital Interests” and “Habitual Abode”. Returning readers of Tax Tips would know that elaboration of these terms may be found in the Commentaries to the OECD Model Tax Convention on Income and on Capital: Condensed Version 2017 (“the 2017 Model Tax Convention”), as extracted below:

Permanent Home

The residence is that place where the individual owns or possesses a permanent home, meaning that the individual must have arranged and retained it for his permanent use as opposed to staying at a particular place that is intended to be of short duration (travel for pleasure, business travel etc).

Home can be a house or apartment belonging to or rented by the individual, but the permanence of the home is essential; this means the individual has arranged to have the dwelling available to him at all times continuously. A house owned by an individual cannot be considered to be available to that individual during a period when the house has been rented out and effectively handed over to an unrelated party so that the individual no longer has the possession of the house and the possibility to stay there.

Centre of Vital Interests

If the individual has a permanent home in both Sides, it is necessary to look at the facts in order to ascertain with which of the two Sides his personal and economic relations are closer. Regards will be had to his family and social relations, his occupations, his political, cultural or other activities, his place of business, the place from which he administers his property etc. The circumstances must be examined as a whole, but it is nevertheless obvious that considerations based on the person acts of the individual must receive special attention. If a person who has a home in one Side sets up a second in the other Side while retaining the first, the fact that he retains the first in the environment where he has always lived, where he has worked, and where he has his family and possessions, can, together with other elements, go to demonstrate that he has retained his centre of vital interests in the first Side.

Habitual Abode

It requires a determination of whether the individual lived habitually, in the sense of being customarily or usually present, in one of the two Sides but not in the other during a given period. It is a notion that refers to the frequency, duration and regularity of stays that are part of the settled routine of an individual’s life and are therefore more than transient. The length of time to look at in determining where an individual habitually abodes should be sufficiently long, and the relevant period of time will not always correspond to the period of dual-residence.

Other than the 2017 Model Tax Convention Commentaries, readers may also refer to the “Interpretation of the DTA between the People’s Republic of China and Singapore and the Protocol” issued by the State Administration of Taxation of China under Circular GuoShuiHan (2010) 75. The interpretation contained therein would also be applicable to other DTAs signed by China and other jurisdictions where the provisions are identical. The interpretations adopted are basically a simplified version of the 2017 Model Tax Convention Commentaries.

The Practice

It is good to have rules set out in the DTA to help determine which Side the tax residency of an individual belongs to. However, what happens in practice? This is the key problem. The current IIT Law does not determine the chargeability to IIT based on residency, and a Foreigner would only be subject to IIT on worldwide income when he resides in China for five consecutive years which is a position that can be easily avoided. Therefore, it is likely that the Chinese tax offices have handled very few cases of resident determination. When such cases begin to surface next year, numerous Foreigners would face a substantial increase in IIT if the tax officers do not have a good understanding of how to determine tax residency. As employers are unlikely willing to bear the additional IIT exposure, many employees especially Hong Kong people may refuse to work in the Mainland.

Tax Tips

IIT affects the well-being of every individual and deserves high attention. The above discussions should be helpful to readers in planning ahead of the changes. Companies are recommended to closely follow the development of the Draft Amendments and the upcoming changes to the DIR in order to ensure that human resources issues are managed well and the employees’ concerns are addressed. For Hong Kong individuals who ordinarily reside in Hong Kong, they should consider applying for the Certificate of Resident Status with the Hong Kong Inland Revenue Department as supporting of tax residency. Affected individual and companies should talk to knowledgeable tax consultants, such as us, as soon as possible for advice on managing the tax exposure.
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(This is an English translation of the Chinese article published in the Hong Kong Economic Journal Forum on 8 August 2018: https://manageyourtax.com/HKEJ Forum 14)

Ref:

NPC reports:
http://www.npc.gov.cn/npc/xinwen/lfgz/lfdt/2018-07/09/content_2057484.htm

IIT Amendment Bill:
http://money.163.com/18/0629/11/DLFD41VJ00258105.html

OECD Model Tax Convention: https://read.oecd-ilibrary.org/taxation/model-tax-convention-on-income-and-on-capital-condensed-version-2017_mtc_cond-2017-en#.WmNWKqiWYdU#page32

Guo Shui Fa (2010) 75:
http://hd.chinatax.gov.cn/guoshui/action/GetArticleView1.do?id=109865&flag=1

HK Tax Resident Certificate – Individual – Mainland:
https://www.ird.gov.hk/eng/pdf/ir1314a_e.pdf
August 8, 2018